d On January 1, 2023, Corgan Company acquired 70 percent of the outstanding voting stock of Smashing, Incorporated, for a total of $1,050,000 in cash and other consideration. At the acquisition date, Smashing had common stock of $810,000, retained earnings of $360,000, and a noncontrolling interest fair value of $450,000. Corgan attributed the excess of fair value over Smashing's book value to various covenants with a 20-year remaining life. Corgan uses the equity method to account for its investment in Smashing. During the next two years, Smashing reported the following: Items 2023 2024 Net Income $ 260,000 240,000 Dividends Declared Inventory Purchases from Corgan $ 46,000 56,000 $ 210,000 230,000 Corgan sells inventory to Smashing using a 60 percent markup on cost. At the end of 2023 and 2024, 40 percent of the currentlyear purchases remain in Smashing's inventory. Required: a. Compute the equity method balance in Corgan's Investment in Smashing, Incorporated, account as of December 31, 2024. b. Prepare the worksheet adjustments for the December 31, 2024, consolidation of Corgan and Smashing. Complete this question by entering your answers in the tabs below. Required A Required B Compute the equity method balance in Corgan's Investment in Smashing, Incorporated, account as of December 31, 2024. Investment balance 12/31/24 $ 1,273,400 × Required A Required B >
d On January 1, 2023, Corgan Company acquired 70 percent of the outstanding voting stock of Smashing, Incorporated, for a total of $1,050,000 in cash and other consideration. At the acquisition date, Smashing had common stock of $810,000, retained earnings of $360,000, and a noncontrolling interest fair value of $450,000. Corgan attributed the excess of fair value over Smashing's book value to various covenants with a 20-year remaining life. Corgan uses the equity method to account for its investment in Smashing. During the next two years, Smashing reported the following: Items 2023 2024 Net Income $ 260,000 240,000 Dividends Declared Inventory Purchases from Corgan $ 46,000 56,000 $ 210,000 230,000 Corgan sells inventory to Smashing using a 60 percent markup on cost. At the end of 2023 and 2024, 40 percent of the currentlyear purchases remain in Smashing's inventory. Required: a. Compute the equity method balance in Corgan's Investment in Smashing, Incorporated, account as of December 31, 2024. b. Prepare the worksheet adjustments for the December 31, 2024, consolidation of Corgan and Smashing. Complete this question by entering your answers in the tabs below. Required A Required B Compute the equity method balance in Corgan's Investment in Smashing, Incorporated, account as of December 31, 2024. Investment balance 12/31/24 $ 1,273,400 × Required A Required B >
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter12: Intangibles
Section: Chapter Questions
Problem 18E
Related questions
Question
Transcribed Image Text:d
On January 1, 2023, Corgan Company acquired 70 percent of the outstanding voting stock of Smashing, Incorporated, for a total of
$1,050,000 in cash and other consideration. At the acquisition date, Smashing had common stock of $810,000, retained earnings of
$360,000, and a noncontrolling interest fair value of $450,000. Corgan attributed the excess of fair value over Smashing's book value
to various covenants with a 20-year remaining life. Corgan uses the equity method to account for its investment in Smashing.
During the next two years, Smashing reported the following:
Items
2023
2024
Net Income
$ 260,000
240,000
Dividends
Declared
Inventory Purchases
from Corgan
$ 46,000
56,000
$ 210,000
230,000
Corgan sells inventory to Smashing using a 60 percent markup on cost. At the end of 2023 and 2024, 40 percent of the currentlyear
purchases remain in Smashing's inventory.
Required:
a. Compute the equity method balance in Corgan's Investment in Smashing, Incorporated, account as of December 31, 2024.
b. Prepare the worksheet adjustments for the December 31, 2024, consolidation of Corgan and Smashing.
Complete this question by entering your answers in the tabs below.
Required A Required B
Compute the equity method balance in Corgan's Investment in Smashing, Incorporated, account as of December 31, 2024.
Investment balance 12/31/24
$ 1,273,400 ×
Required A
Required B >
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